MBA: Forbearances Plunged Again

Forbearances fell again last week, dropping to 2.28% of servicers’ portfolio volume, down from 2.62% the week before, according to the Mortgage Bankers Association’s (MBA) latest survey. The estimated number of homeowners in forbearance plans is around 1.1 million.

This week’s drop of 34 basis points beats out last week’s decline of 27 basis points, which was at that point the fastest rate of decline since October 2020.

For Fannie Mae and Freddie Mac loans, forbearances were down 16 basis points to 1.05%. Ginnie Mae loans fell 17 basis points to 2.77%. Portfolio loans and private-label securities shares fell 108 basis points, from 6.91% to 5.34%.

Independent mortgage bank servicers saw a drop of 25 basis points to 2.57%, and the share for depository servicers declined 53 points to 2.16%.

“Forbearance exits continued at an even more robust pace, resulting in a 34 basis-point decline in the overall forbearance rate. The decline was apparent across all servicer types and investor types,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. 

“There was a substantial drop of over one percentage point in the forbearance rate for portfolio and PLS loans, which includes loans held for investment purposes, loans serviced for private investors, and government loans that were bought out of Ginnie Mae pools for the purposes of modifying them and then re-securitizing them into Ginnie Mae pools.”  

The number of loans in forbearance is now down 3.2 million from its peak of 4.3 million in June. Fratantoni further noted that increasing wages and employment, home-price appreciation, and the availability of options for exiting forbearance would provide an easy transition for borrowers.

These numbers should lessen fears of an approaching “forbearance cliff” as borrowers lose their COVID-19-era benefits and protections.

Here are some more findings from the report:

  • By stage, 14.8% of total loans in forbearance are in the initial forbearance plan stage, while 75.5% are in a forbearance extension. The remaining 9.7% are forbearance re-entries.
  • Total weekly forbearance requests as a percent of servicing portfolio volume (#) decreased relative to the prior week: from 0.05% to 0.04%.
  • Loans in forbearance as a share of servicing portfolio volume (#) as of October 10, 2021:
    • Total: 2.28% (previous week: 2.62%)
    • IMBs: 2.57% (previous week: 2.82%)
    • Depositories: 2.16% (previous week: 2.69%)